European CEOs are optimistic about the green transition, but remain concerned about the impact of complex and inconsistent regulations on their ability to navigate it and remain competitive.
The survey by The European Round Table for Industry (ERT) and think-tank The Conference Board assesses the current and anticipated business and economic outlook among CEOs of leading companies. Sentiment ranges from 0 to 100, with readings below 50 indicating a higher prevalence of negative responses compared to positive ones.
According to the results, overall confidence among CEOs has dropped into negative territory to 42, down from a low but positive 53 just six months ago.
This decline is primarily attributed to a gloomy assessment of the current economic outlook, with only 15% of CEOs reporting an improvement in business conditions from six months ago.
Despite the overall drop in confidence, there is a glimmer of hope in the area of a green transition. The majority (87%) of CEOs are either somewhat or very optimistic that policy actions over the next three years will strengthen incentives for green investments. Furthermore, 65% of respondents remain positive that policymakers will take ambitious actions to improve energy infrastructure over the next three years, a crucial step towards achieving Europe’s 2030 climate goals.
Sentiment among CEOs around actions to strengthen the circular economy in Europe is also upbeat. Three-quarters (74%) expect to see policymakers launching ambitious actions to support higher circularity (e.g., reuse or recycling of materials or products) within the European economy over the next three years.
But, despite this optimism, concerns persist about the administrative burden that regulations associated with many green initiatives will impose on businesses. In fact, a majority of CEOs (56%) view a complex and/or incoherent regulatory environment as the primary threat to European global competitiveness over the next three years.
While regulation is considered the foremost obstacle hindering European competitiveness, only a small percentage of CEOs – just 15% – are hopeful that policymakers will take decisive action to restore regulatory coherence and/or alleviate administrative burdens in Europe over the next three years.
A prime example of a regulation focused on sustainability is the Corporate Sustainability Reporting Directive (CSRD), which aims to improve the standard of non-financial reports from Europe’s largest companies. While many consider this to be a crucial aspect of the green transition, there are concerns about the strain it may place on businesses.
Earlier this year, a group of MEPs from the European People’s Party (EPP) attempted to block the European Sustainability Reporting Standards (which underpin the CSRD), citing the “substantial administrative burden” it would impose on businesses. However, their efforts were prevented by a majority vote in the European Parliament.
You can find a link to the full report here.
